For over 30 years, the top goals of senior management for Accounts Payable were:
- reduce costs
- reduce headcount
- reduce cycle time.
Invoice automation has dramatically helped to achieve all three of these goals. Imaging and automated work flow have been key. Other technologies such as optical character recognition and electronic invoicing have also helped.
By accomplishing these goals, senior management and accounts payable could and should focus on additional concerns such as ensuring compliance with laws, regulations, and policies. Leading organizations have realized that to address these concerns, it is necessary to look beyond accounts payable and look at the entire Procure-To-Pay process.
The Procure-to-Pay process begins with someone in your organization having a need for some goods or services. The next step, often referred to as Sourcing, includes the identification of potential suppliers, obtaining additional information and quotes. Supplier Evaluation, Supplier Selection, Supplier Authentication and Contracting are also part of Sourcing. Sourcing is then followed by Ordering which includes Supplier Onboarding or Setup and may include Catalog Management, Requisitions, and Purchase Orders. Various approvals and compliance checks are part of the Ordering process. Delivery and Receiving of the requested goods or services is the next step. This is followed by Invoice Processing activities. The last step is typically Payment Processing.
A comprehensive Procure-to-Pay process should include various types of analyses, controls and checks before, within and after each step. Adding controls and checks can address policy and regulatory compliance, reduce risks and add to a company’s bottom line.
A review of Procure-To-Pay should:
- Start with the identification of internal and external stakeholders
- Include sourcing and contracting processes and procedures
- Identify federal, state, local and international compliance issues
- Cover the role of treasury
- Address governance issues, especially if you are a public company or not-for-profit
- Identify metrics that can be used to assess the current state
These metrics can be used to set goals and measure progress toward achieving them. They should monitor efficiencies such as cost, effort, productivity and timeliness as well as effectiveness such as quality, compliance and impact of changes.
A review of Procure-to-Pay will provide insights to ensure a successful transition to Procure-To-Pay.
About Jon Casher, Guest Author
Jon Casher is the President of Casher Associates, Inc. which specializes in project management, process management and information technology consulting. Jon has worked with hundreds of organizations in the public and private sectors providing guidance and assistance on a broad range of financial operations, accounts payable, accounts receivable, treasury and procure-to-pay topics.Tags: